Ethical but Unemployed

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Instinct might argue that a lawyer should not be subject to termination because he or she reports ethics violations by another attorney to disciplinary authorities.

But instinct does not govern employment law–that job belongs primarily to the doctrine of employment at will. And the general rule in U.S. jurisdictions is that an at will employment relationship may be terminated by either the employee or the employer for good cause, no cause or even bad cause.

In recent years, however, many jurisdictions have carved out a few exceptions to the presumptions of the employment-at-will doctrine based on theories of contract, the tort of retaliatory discharge and statutes such as whistle blower laws.

In at least one case, a lawyer was permitted to bring a claim against a firm that fired him for trying to comply with professional conduct rules by reporting a fellow associate’s misconduct.

The lawyer alleged both breach of implied contract and wrongful discharge against the firm. The New York Court of Appeals allowed the lawyer to pursue the breach of implied contract claim. The court reasoned that when a firm hires an attorney to practice as an associate, there is an implied understanding “that both the associate and the firm in conducting the practice will do so in accordance with the ethical standards of the profession.” Wieder v. Skala, 609 N.E.2d 105 (1992).

The court was willing to find an implied obligation of good faith in the context of the ethics rule requiring lawyers to report misconduct because that rule “is critical to the unique function of self regulation belonging to the legal profession.” The court limited its holding, however, by stating that it was “by no means suggest[ing] that each provision of the Code of Professional Responsibility should be deemed incorporated as an implied in law term in every contractual relationship between or among lawyers.”

The New York court declined to permit the lawyer to proceed on the wrongful discharge claim. The court stated that the legislature should decide whether to extend the tort to lawyers in at will employment situations.

Head-on Decision

The trial level Connecticut Superior Court in New Haven recently addressed the retaliatory discharge issue more directly in a ruling suggesting that professional conduct rules governing lawyers might provide a public policy basis for such claims. Ordinarily, plaintiffs alleging retaliatory discharge must show they were fired in retaliation for their activities and that the discharge contravened “clearly mandated public policy.”

In determining what constitutes “public policy” for purposes of retaliatory discharge claims, courts have generally looked to state constitutions, statutes, judicial decisions and administrative regulations. In some instances, however, courts have adopted a broader view by looking to rules of conduct for various professions as statements of public policy.

Generally, those courts have held that employees who invoke professional conduct codes must demonstrate that those codes are clear and compelling in their mandates and sufficiently notify employers and employees of just what professional behavior is called for.

Courts also have held that the rules invoked by employees must be intended primarily to benefit the public rather than members of the profession, and that plaintiff employees must show they had an objective, good faith belief that those rules were being violated.

But so far, lawyers have had little success in wrongful discharge claims based on public policy arguments. In such cases, the courts generally have reasoned along two lines: first, that extending the public policy exception to the employment at will doctrine is unnecessary because lawyers already are bound by ethics rules that protect the public interest; and second, that permitting lawyers to pursue wrongful discharge claims would undermine the confidential nature of the client lawyer relationship.

The Illinois Supreme Court, for instance, has rejected retaliatory discharge claims by lawyers against both law firms and corporate employers. In one of those cases, Justice Charles E. Freeman wrote in his dissent that the court’s decision “serves as yet another reminder to the attorneys in this state that, in certain circumstances, it is economically more advantageous to keep quiet than to follow the dictates of the Rules of Professional Conduct.” Jacobson v. Knepper & Moga P.C., 706 N.E.2d 491 (1998).

The Superior Court of Connecticut, however, reached a dramatically different conclusion in an unpublished opinion considering a lawyer’s wrongful discharge claim. Matzkin v. Delaney, Zemetis, Donahue, Durham & Noonan, No. CV044000288S (July 29, 2005). Matzkin, a case of first impression in Connecticut, involves a law firm associate who was representing a firm client at trial when he learned that opposing counsel in the case had telephoned two witnesses and told them that they did not have to testify even though they had been subpoenaed.

In the belief that the other lawyer’s actions constituted witness tampering, Matzkin informed several partners at his firm that he intended to report the incident to Connecticut’s Statewide Grievance Committee. When the partners expressly forbade Matzkin from filing a grievance in the firm’s name, he told them he would file a grievance independently. Soon after that, the firm fired him. (Matzkin never did file a grievance against opposing counsel.)

Matzkin sued for wrongful discharge asserting that the firm fired him to prevent him from filing the grievance. The firm filed a motion to strike his claim on grounds that Connecticut’s professional conduct rules do not constitute an important public policy that would create an exception to the firm’s right to fire an employee at will. The firm also argued that Matzkin failed to take steps to vindicate that public policy because he never actually filed the grievance.

The court denied the firm’s motion. The court noted that the Connecticut Supreme Court has sanctioned a common law cause of action for wrongful discharge arising out of some important violation of public policy. In evaluating such claims, a court must determine whether the plaintiff alleged that the discharge violated any explicit statutory or constitutional provision, or “any judicially conceived notion of public policy.” The court concluded that Connecticut’s professional conduct rules for lawyers constitute “important public policy” that provides the basis for wrongful discharge claims.

The court cited Rule 8.3 of the Connecticut Rules of Professional Conduct, whose language closely tracks Rule 8.3 of the ABA Model Rules of Professional Conduct. The Connecticut version states that a lawyer “having knowledge that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects, shall inform the appropriate disciplinary authority.”

The court also cited language in the preamble to the rules stating that every lawyer should help secure their observance by other lawyers. “Neglect of these responsibilities compromises the independence of the profession and the public interest which it serves,” the preamble states.

“Because the legal profession is self regulated and relies upon its members to police itself,” the court stated, “no lawyer’s employment should be conditioned upon turning a blind eye to violations of the rules, which are applicable to all lawyers. To allow this would compromise the autonomy of the profession.”

The court also rejected the firm’s argument that Matzkin must have actually filed a grievance to vindicate the public policy expressed in the conduct rules.

Waiting for the Fallout

The wider impact of the Matzkin ruling is uncertain. A ruling still must be made on the substance of the terminated associate’s wrongful discharge claim against the firm. And while the court did not explicitly limit its holding to the ethics rule that calls for lawyers to report misconduct by other attorneys, it is not clear what other ethics provisions might give rise to exceptions to the termination at will principle. It also remains to be seen whether the holding in Matzkin will be adopted by other jurisdictions.

One issue, for instance, is whether the holding in Matzkin, in which the plaintiff was an associate at a law firm, would be applied to a partner. At least one earlier case suggests that a firm partner who is fired after reporting professional misconduct might face different and perhaps tougher hurdles than an associate in seeking recovery for wrongful discharge.

In a 1998 Texas case, a partner sued her former firm alleging breach of duty and breach of partnership agreement when she was fired after informing the managing partner that she suspected another partner was overbilling a client.

Ruling in Bohatch v. Butler & Binion, 977 S.W.2d 543, the Texas Supreme Court rejected the plaintiff’s argument that public policy imposes a limited duty to remain partners with a whistle blower because allowing a firm to retaliate against a partner who in good faith reports suspected overbilling would discourage compliance with rules of professional conduct and hurt clients.

A partner “can be expelled for accusing another partner of overbilling without subjecting the partnership to tort damages,” the court said, because the charges, “whether true or not, may have a profound effect on the personal confidence and trust essential to the partner relationship. Once such charges are made, partners may find it impossible to continue to work together to their mutual benefit and the benefit of their clients.”

The court noted that its holding does not obviate the ethics duty of lawyers to report misconduct under Rule 8.3. “Such duties sometimes necessitate difficult decisions,” the court said. “The fact that the ethical duty to report may create an irreparable schism between partners neither excuses failure to report nor transforms expulsion as a means of resolving that schism into a tort.”

Kathleen Maher, a lawyer, is with the ABA Center for Professional Responsibility.

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